Proposed hydro project could see rate increases for Labrador

LABRADOR - People hooked into the Labrador Interconnected grid may notice a bump in their NL Hydro bills soon. The crown corporation proposed a capital project to the Public Utilities board recently to reconfigure the existing transmission line which runs from Churchill Falls to the Happy Valley-Goose Bay terminal station and instead connect it into the Muskrat Falls terminal station.

The project, estimated to cost $19,978,500, will recover the cost from Labrador customers by way of an increase of 0.04 cents a kilowatt hour for 2018.

Erin Squires, a spokesperson for NL Hydro, said that translates into or about $1 per month based on average use for domestic customers. That will increase in 2019 by 0.11 cents a kilowatt hour.

“Electricity demand in Happy Valley-Goose Bay and area is growing and that is forecast to continue into the future,” Squires told the Labradorian. “To support growing load levels and deliver electricity reliably, the capacity of transmission system supplying the area must be increased.”

She said the available capacity of the existing transmission infrastructure supplying the area is constrained due to the original design completed 40 years ago and the distance between Churchill Falls and Happy Valley Goose Bay. Hydro has been actively looking at solutions to the issue, she said, and believe this is the least cost option.

“Hydro must always makes decisions to invest in the system based on balancing the need to ensure reliable service with the costs of capital upgrades and new infrastructure,” Squires said.

The power would still be coming from Churchill Falls but would be routed through Muskrat Falls. Hydro would have to build a six-kilometre wood pole transmission line from the Muskrat Falls Terminal Station, which will connect from Muskrat to Churchill.

The timeline for the project has the transmission interconnection in service by December of this year and the project up and running by December of 2019. Squires said Hydro is working on providing the PUB with clarification and further information and hopes to have it all submitted in the next two weeks.

The PUB sent the proposal back to Hydro for more information on several issues.

One of those is the board isn’t convinced it is the least cost option for Labrador customers.

They said in their decision on the project while an expenditure will have be made to deal with the forecast increased load on the system, “such a significant project should be supported with detailed evidence that demonstrates how the proposed project is consistent with the provision of least-cost reliable service, considering both short and long-term needs on this system.”

Other options such as continued operation of the current transmission line and the Happy Valley Gas Turbine were brought up by the PUB. Hydro said the costs of maintaining and upgrading those makes this option the most cost effective.

Another issue the PUB has is that Hydro has yet to reach an agreement with the Department of National Defense on the projected increase in 12.5 MW required for Canadian Forces Base Goose Bay in 2020. The base is going electric as part of the federal government’s commitment to reduce carbon emissions.

Hydro said they are in negotiations with DND and will have an agreement in place by 2020.

The PUB also expressed concerns with the short term implications of the project. They said Hydro hasn’t adequately explained how it will meet the increased forecast demand prior to December, when the first phase of this project is slated to be up and running.

When asked about this by the Labradorian Squires said for this winter Hydro temporarily moved transmission service over onto one of the new Labrador transmission assets.

“This minimized the losses and increased capacity, which allowed for service through the peak this winter,” she said.

The PUB said they believe further information should be provided by Hydro addressing the short-term and long-term issues. Once that information is provided they will review the project and decide whether it will go ahead.